- The internet has taken over the globe and altered the way things were done previously. It has also modernised the banking industry. Internet banking eliminates the need for users to visit bank branches for services such as money transfers, cash withdrawals, and other financial transactions.
- This has eliminated the usage of cheque books, deposit slips, and other paper forms, which were once an important element of banking services. However, you must understand what a cancelled cheque means and where it is used.
- Cheques are one of India's most widely used and traditional banking instruments. With the advancement of technology, transactions may now be completed online with just a few mouse clicks.
- Cheques, on the other hand, are still widely used by those who are wary of internet techniques or who find them inconvenient. Everyone uses a copy of the cancelled cheque as proof of ownership of a specific bank account.
What is a cancelled cheque
- Cancelled cheque means one on which two parallel lines have been drawn across the arrangement. Between these lines, you must additionally write the term "cancelled." You are not required to sign the cancelled cheque. The account number, account holder's name, MICR code, bank name and branch name, and IFSC will be gathered from the cancelled cheque.
- A copy of a cancelled cheque is one for which payment has already been made. When a cheque is drawn for cash, the bank marks it as cancelled. The cheque cannot be used as an authorization for the removal of additional monies from the payer's account once it has been cancelled.
How do you cancel cheque
To cancel cheque, just strike two lines across it and write the word "Cancelled" in the middle. The cancelled cheque does not require your signature. It merely serves as proof that you have a bank account. The account holder's name, branch name and location, account number, and MICR code are all printed on the cheque, which is sufficient proof.
When would you require a cancelled cheque
In the following situations, you may be required to submit a cancelled cheque:
- If you want to invest in mutual funds or the stock market, you'll need to open a Demat account. To open the account, the corporation will require you to provide a cancelled cheque to verify that the bank account associated with the investment is, in fact, yours. The cancelled cheque is required in compliance with Know Your Customer (KYC) rules.
- When purchasing a gadget or a high-value item, Equated Monthly Instalments (EMI) is the most popular way of payment. Even with loans such as a car loan, a home loan, an education loan, or a personal loan, people pay monthly instalments. To begin the monthly instalment procedure, you must present a cancelled cheque as proof of bank account ownership.
- Electronic Clearance Service: An electronic clearance service deducts money from your account automatically every month for whatever transactions you've made.
- Withdrawal from the Provident Fund: When you want to withdraw money from your EPF, most companies will ask for a cancelled cheque.
- Insurance Policy: Even when acquiring an insurance policy, a cancelled cheque is required.
Frequently asked questions
How do you cancel cheque?
To cancel cheque, simply strike two lines across it and write ‘Cancelled' in the space between them.
Can I cancel cheque using a red pen?
When writing or cancelling a cheque, always use blue or black ink. The use of any other colour will be rejected.
Are there any drawbacks to cancelling a cheque?
Because a cancelled cheque cannot be used to withdraw money from your account, the answer is no.
What information can be gleaned from a cancelled cheque?
The information on the cancelled cheque could include your bank account number, branch name and address, and MICR code.
Is it necessary for me to sign the cancelled cheque?
No. Because the cancelled cheque is just used as proof and not for a transaction, you are not obliged to sign it.
Two lines have been drawn across the cheque. Is it going to be cancelled?
No. Otherwise, it will not be considered as a cancelled cheque unless you write the term "Cancelled" on it. At the same time, it can be misappropriated by others.
How can you utilise a cancelled cheque?
A cancelled cheque serves as verification that you have an account with the specified bank. These may be necessary when applying for a loan, investing in mutual funds, establishing an Electronic Clearance Service, purchasing insurance, and other related activities.